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March 19, 2012; Source: Nieman Journalism Lab
The Neiman Journalism lab has provided a sneak peek at a short list of tips for those who are seeking nonprofit status as journalism outlets and the first tip is… to avoid calling yourself a journalism organization. Journalism is, quite simply, not among the defined categories eligible for nonprofit status. Education is, however, and if a case can be made for your educational value in, say, civic life, it may well be a better way to go.
This tidbit is one of a number that will be published in a forthcoming guide to be published by the Digital Media Law Project (DMLP). Justin Ellis of the Neiman Journalism Lab got a small preview and it all looks very useful.
Jeff Hermes, the director of the DMLP said, “The key to passing this side of the test is whether journalism is your purpose or the method by which you’re achieving the educational purpose.” Think of journalism as a tool for education. The next step is to look like you are structured to educate the public. Hermes says that the IRS will look at whether you provide researched, factual information to a specific audience and are less focused on advocacy. They want to see the journalists as researchers and experts. Hermes expands on this theme by revealing that the IRS scrutinizes applicants on “whether they are lobbying for specific political candidates or campaigns. That means no editorial-page-style endorsements of candidates.”
There is also apparently some concern regarding the commercialism of the venture. Generating revenue through subscriptions or advertising can set off alarms sufficient to deep six your application, says Hermes. “There’s a common misconception among applicants that it’s okay to earn advertising revenue and other revenue as long as you pay taxes on it,” Hermes said. “That’s not quite right.” While you can make some money from such stuff, according to Hermes, that revenue cannot be the main source of your money. The IRS wants to see “traditional nonprofit sources” in your revenue mix—for instance, foundation money and support from readers.
Finally, Hermes contends that it helps to have a specific focus and area of expertise such as investigative reporting or other watchdog work. “The organizations that are most successful are those involved in investigative journalism and [those that] show some institutional expertise in researching particular topics,” Hermes said.
“The current structure is very complex in terms of standards the IRS applies—it’s not always intuitive,” he said. “The mixing of consideration of content-related issues—what the content of your publication is—with issues of your business model and where you’re getting revenues give rise to what sometimes look like contradictory results.”
And while you are waiting for this report to come out, says Ellis, you might wish to avail yourself of the services of the Online Media Law Network, which connects online news outlets to attorneys, often on a pro-bono basis, and helps with 501(c)(3) applications. –Ruth McCambridge